§ It is against this background that I turn to the central objectives of my Budget.
§ Some have urged that I should abandon the battle against inflation as our top priority and look instead for ways of expanding the economy. If this were the way to sustained recovery for British Industry, and so to the creation of more long-term jobs, I should certainly be ready to consider a change of course, because the well-being of our people and the health of our economy are more important than any Government's commitment to a particular strategy.
§ But to change course now would be fatal to the whole counter-inflation strategy. Our problem in recent years has not been a lack of final demand. Since 1977, spending in the whole economy, in money terms, has risen by no less than 50 per cent. Most of the impact of that increase has been dissipated in higher prices. In so far as the volume of spending has increased, a large share of the extra has gone on imports. In the end, there has been very little effect on United Kingdom output.
§ Just boosting demand would do nothing to remedy that problem. Rather, it would risk throwing away the real achievements that we have secured, without winning any compensating gains. In the past, Governments have too often deprived themselves and the British people of the success that they deserved because they abandoned the policies when the going got rough—when the sacrifices, in fact, had largely been made, but before the long-term benefits had begun to arrive. It would, indeed be a tragedy to inflict on ourselves a further dose of crippling inflation just at the time when, with resolution, our industry can be helped to take advantage of the more stable conditions, which should follow the easing of the present recession.
§ I am, therefore, determined to sustain the firm action that is necessary to maintain our success in the battle against inflation. It is also essential this year to respond to the two imbalances in our economy that I have described: the imbalance between consumers and industry and the imbalance between the public and the private sectors. Moving towards a better balance must be the central purpose of this Budget.